Category: Uncategorized

Automatic Forgiveness?: Treasury Secretary Mnuchin recently suggested publicly that the SBA should consider forgiving all PPP loans and forgoing the process of the forgiveness application. This would, of course, be a stunning change in direction with respect to the mechanics of loan forgiveness. There has been chatter for a while that the SBA may seek to forgo applications on “small” loans as a vast majority of the loans issued were below $150k. This would substantially reduce the workload of the lenders and SBA when it comes to processing applications, and is appearing more and more likely as the days roll on, though the actual dollar threshold is a moving target. 

EIDL Loans: As we all know, the EIDL loan program was funded and gained a lot of traction/interest at the same time as the PPP roll out. Many companies clamored to gain access to the loan product as a result of its favorable terms (30 year repayment, 4% max rate, no personal guarantee for small loans). Withum is starting to see clients identify onerous covenants and reporting requirements (e.g., quarterly financial reports and year-end reviewed financials). There does not appear to be uniformity among all EIDL loan agreements, if you received an EIDL loan, it is important to review your agreement to ensure you have clearly identified all reporting requirements that are connected with the loan.

Reminder Section:  (what should I be doing):

• Talk to your payroll company about claiming the employer payroll tax deferral and employee retention credits (ERC) that were made available in the CARES Act.
• Talk to your payroll company about claiming the qualified sick/family leave refundable tax credits (from FFCRA, passed prior to the CARES Act).
• Consider speaking with your lender to discuss changes to terms of existing debt facilities.
• If you have already received a PPP loan, start forecasting how you intend to spend the funds and how you can qualify for the highest amount of loan forgiveness possible.  If you are not forecasting 100% loan forgiveness, then most likely you should seek assistance regarding your particular situation.  Withum believes the vast majority of borrowers should expect and plan to receive 100% loan forgiveness.

WASHINGTON, DC – On Monday, July 20, the U.S. Department of Labor published additional guidance for workers and employers on how the protections and requirements of the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Families First Coronavirus Response Act (FFCRA) affect the workplace as workplaces reopen amid the coronavirus pandemic. The guidance from the Department’s Wage and Hour Division (WHD) includes commonly asked questions and answers that address critical issues in all three laws. 

“The U.S. Department of Labor understands how critically American workers and employers need this information as they return to work. Continuing to provide it remains a top priority for the Wage and Hour Division,” said Wage and Hour Division Administrator Cheryl Stanton. “With so many workers and employers committed to the greatest comeback the American workforce has ever seen, we are providing ongoing guidance to help them better understand their rights and responsibilities to protect workers and help ensure a level playing field for employers as our economy recovers.” 

Today’s guidance is the latest addition to compliance assistance materials the WHD has published. These materials include a Fact Sheet for Employees, a Fact Sheet for Employers and a Questions and Answers resource about paid sick and expanded family and medical leave under the FFCRA. WHD has also produced two guidance posters, one for federal workers and one for all other employees, that fulfill notice requirements for employers obligated to inform employees of their FFCRA rights; Questions and Answers about posting requirements; and simple Quick Benefits Tips to determine how much paid leave the FFCRA allows workers to take.

FFCRA will help the U.S. combat and defeat the coronavirus by reimbursing, through tax credits, American businesses with fewer than 500 employees for the cost of providing employees with paid leave taken for specified reasons related to the coronavirus. The legislation enables employers to provide such paid leave, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.

WHD provides additional information on common issues employers and employees face when responding to the coronavirus and its effects on wages and hours worked under the Fair Labor Standards Act and job-protected leave under the Family and Medical Leave Act at https://www.dol.gov/agencies/whd/pandemic

For more information about the laws enforced by the WHD, call 866-4US-WAGE, or visit www.dol.gov/agencies/whd

Alston & Bird have released their July 20 COVID-19 update, including the latest news on emergency funding, administrative and regulatory actions, workplace and home issues, and many other topics, as well as to links to all their past updates.

Alston & Bird have released their July 13 COVID-19 update, including the latest news on emergency funding, administrative and regulatory actions, workplace and home issues, and many other topics, as well as to links to all their past updates.

Alston & Bird have released their July 6 COVID-19 update, including the latest news on emergency funding, administrative and regulatory actions, workplace and home issues, and many other topics, as well as to links to all their past updates.

New PPP Bill Passed by House and Senate:  The Bill that was introduced and passed by the Senate on Tuesday, June 30 has now been passed by the House and is headed to the President’s desk for signature.  This Bill extends the application deadline for the PPP an additional 5 weeks (recall that the deadline was June 30, 2020 and they still had about $130 billion in available funds).  It is unclear how valuable this additional time will be since most businesses that wanted funds have already received them.

New Stimulus Package in the Works:  Treasury Secretary Steven Mnuchin told a House panel that the administration would support a new stimulus package if it was put forward. He also indicated that he is in discussions with the Senate about revising the PPP to provide additional support to hard hit industries such as restaurants, hotels, etc.  We are not sure yet how the P4 Bill that was passed by the House (which allows businesses to obtain a second PPP loan under certain circumstances) will fare if the Senate decides to take it up, but there appears to be bipartisan support to find a solution.

Reminder Section:  (what should I be doing):

• Talk to your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
• Talk to your payroll company about claiming the qualified sick/family leave refundable tax credits (from FFCRA, passed prior to the CAREs Act).
• Consider speaking with your lender to discuss changes to terms of existing debt facilities.
• If you have already received a PPP loan, start forecasting how you intend to spend the funds and how you can qualify for the highest amount of loan forgiveness possible. If you are not forecasting 100% loan forgiveness, then most likely you should seek assistance regarding your particular situation. Withum believes the vast majority of borrowers should expect and plan to receive 100% loan forgiveness.

New PPP Bill Introduced in the Senate:  On Tuesday, June 30th, the Senate passed a bill which extends the application deadline for the PPP an additional 5 weeks (recall that the deadline was June 30th and they still had about $130 billion in available funds).  The bill still needs to go through the House and would need to be signed by the President to be passed into law.  It is unclear how valuable this additional time will be as most believe that those businesses who wanted funds have already received them.

When Will Banks Accept Applications?:  Many have inquired regarding when they can apply for forgiveness and when banks will accept applications.  Withum has heard that one bank has reached out to its clients to inform them that if they received their PPP loan in April, the bank will accept a forgiveness application in August.  If the loan was received after April, the date the bank will accept the application is TBD.  This is of course just one bank, but they have generally seen that banks are not in a position to accept applications currently and few have been explicit in how they will manage the process.  They also have not seen any mechanism for a borrower to “declare” that they want to keep their eight-week covered period if they want to.  At this point, borrowers will just have to be patient, they do not believe that there are any proactive steps required on the borrowers side right now other than being in consistent contact with their lender on the process.

Status of the P4 Bill:  The P4 bill that was introduced by the House two weeks ago has not moved since it first came into play.  This bill would allow certain borrowers to obtain a second PPP loan if they meet certain criteria (less than 100 employees, 50%+ reduction in revenue).  There is not much information on the probability of this passing or how it will interplay with the PPP extension bill noted above. 

Main Street Lending Programs:  Withum reported on the general parameters of the MSLPs previously, at this point the program is still not available to the public.  Anecdotally there have been mixed reviews from banks, many of which have indicated that they do not intend to participate in the program. 

New FAQs:  It has been rumored for several weeks that a multitude of new FAQs are coming out in the near future to cover current open questions and to provide clarification.  Withum believes this is correct but do not have insight as to when they are coming, it could be as soon as this week. 

Reminder Section:  (what should I be doing):

• Talk to your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
• Talk to your payroll company about claiming the qualified sick/family leave refundable tax credits (from FFCRA, passed prior to the CAREs Act).
• Consider speaking with your lender to discuss changes to terms of existing debt facilities.
• If you have already received a PPP loan, start forecasting how you intend to spend the funds and how you can qualify for the highest amount of loan forgiveness possible. If you are not forecasting 100% loan forgiveness, then most likely you should seek assistance regarding your particular situation. Withum believes the vast majority of borrowers should expect and plan to receive 100% loan forgiveness.

The IRS has released Notice 2020-50, which offers added guidance and relief for retirement plan participants taking pandemic-related distributions and loans under the CARES Act. Notice 2020-50 expands the definition of qualified individuals under the Act and provides guidance regarding coronavirus-related distributions and loans. Lindabury, McCormick, Estabrook & Cooper, P.C. have prepared a summary outlining the details, including the criteria for eligibility.

Alston & Bird have released their June 29 COVID-19 update, including the latest news on emergency funding, administrative and regulatory actions, workplace and home issues, and many other topics, as well as to links to all their past updates.

New Safe Harbor from the FTE Reduction Rule:  In the latest IFR, the SBA discussed the new safe harbors to the FTE reduction rule in a manner that appears to be very borrower friendly.  As you know, PPP loan forgiveness is reduced if you reduce your FTE count during your covered period (when compared to your reference period).  The second of the two new safe harbors allows companies to ignore any FTE reductions after February 15, 2020 if they relate to an “inability to return to the same level of business activity” before February 15, 2020 as a result of guidance issued by a variety of agencies (including state and local government) that inhibits such business activity. Examples are closing non-essential businesses and reductions in businesses volume due to social distancing or sanitation guidelines, but the safe harbor can apply to a much broader set of circumstances. 

Withum has included below both an excerpt from the IFR as well as an example provided in the IFR.  This safe harbor does not require the business interruption to cover the entire covered period, meaning that borrowers just need to establish that a disruption occurred for some meaningful period of time during the covered period.  It also does not narrowly define a disruption, allowing borrowers to potentially rely on a broad variety of different “disruptions” caused by the requirements established by these agencies. Therefore Withum believes this new safe harbor has broad applicability, including in the auto, restaurant and hospitality industries, for example, as well as in a variety of professional service industries like law and medicine.

Withum believes the safe harbor is extremely broad, and unless it is pared back by the SBA, a large number of borrowers should be able to avail themselves of it.  If you have an FTE reduction during your covered period, Withum recommends that you closely review this safe harbor from the PPP Flexibility Act, as interpreted by the new IFR, to see if you can fall within it.  The forgiveness application requires that you maintain documentation of the business disruption that took place and what requirement or guidance created it.

Excerpt from IFR:

Borrowers are also exempted from the loan forgiveness reduction arising from a reduction in the number of FTE employees during the covered period if the borrower is able to document in good faith an inability to return to the same level of business activity as the borrower was operating at before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention (CDC), or the Occupational Safety and Health Administration related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19 (COVID Requirements or Guidance). 

The Administrator, in consultation with the Secretary, is interpreting the above statutory exemption to include both direct and indirect compliance with COVID Requirements or Guidance, because a significant amount of the reduction in business activity stemming from COVID Requirements or Guidance is the result of state and local government shutdown orders that are based in part on guidance from the three federal agencies. 

Example provided in the IFR:

A PPP borrower is in the business of selling beauty products both online and at its physical store. During the covered period, the local government where the borrower’s store is located orders all non-essential businesses, including the borrower’s business, to shut down their stores, based in part on COVID-19 guidance issued by the CDC in March 2020. Because the borrower’s business activity during the covered period was reduced compared to its activity before February 15, 2020 due to compliance with COVID Requirements or Guidance, the borrower satisfies the Flexibility Act’s exemption and will not have its forgiveness amount reduced because of a reduction in FTEs during the covered period, if the borrower in good faith maintains records regarding the reduction in business activity and the local government’s shutdown orders that reference a COVID Requirement or Guidance as described above.

Reminder Section:  (what should I be doing):

• Call your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
• Talk to your payroll company about the qualified sick/family leave legislation (FFCRA, passed prior to the CAREs Act).
• Consider speaking with your lender to discuss changes to terms of existing debt facilities. The banking system remains strong.
• If you have already applied for the PPP, start forecasting how you intend to spend the funds and how to qualify for the highest amount of forgiveness possible.

Alston & Bird have released their June 25 COVID-19 update, including the latest news on emergency funding, administrative and regulatory actions, workplace and home issues, and many other topics, as well as to links to all their past updates.

Change to Forgiveness Process: As we all know, the Covered Period was recently changed to be either 8 weeks or 24 weeks, at the borrower’s election if the loan was issued before June 5th. This has opened the door to many companies obtaining full forgiveness of their loan. An issue that has often come up is that many borrowers are able to incur enough expenses to obtain full forgiveness within a period that is longer than 8 weeks but perhaps far shorter than 24 weeks. This has led to the question:  Do I need to wait the full 24 weeks before we apply for forgiveness?  

Up until now the answer was yes, however the IFR release has clarified that a borrower can apply for forgiveness at any time after or DURING their covered period. This will allow borrowers to get the process rolling and perhaps allow them to wrap up the forgiveness process prior to the end of the year.  

Update on Salary and Wage Reduction Rule: The IFR also indicates “If the borrower applies for forgiveness before the end of the covered period and has reduced any employee’s salaries or wages in excess of 25 percent, the borrower must account for the excess salary reduction for the full 8-week or 24-week covered period.”

This is meaningful because it indicates that you will need to account for salary reductions through your full covered period even if you apply for forgiveness early. As an example, if you reduced an employee’s salary in excess of 25% for the first 12 weeks of your covered period, when applying for forgiveness you need to assume that reduction will have been in place for all 24 weeks for purposes of the forgiveness calculation. No guidance was issued about what to do if there are FTE reductions during the covered period. 

The new IFR clarified many other points regarding the loan forgiveness process, and all of the salient ones are included in Withum’s 06/20/2020 webinar on loan forgiveness.  It will be posted on Withum’s website afterwards.

Reminder Section:  (what should I be doing):

• Call your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
• Talk to your payroll company about the qualified sick/family leave legislation (FFCRA, passed prior to the CAREs Act).
• Consider speaking with your lender to discuss changes to terms of existing debt facilities. The banking system remains strong.
• If you have already applied for the PPP, start forecasting how you intend to spend the funds and how to qualify for the highest amount of forgiveness possible.

Alston & Bird have released their June 22 COVID-19 update, including the latest news on emergency funding, administrative and regulatory actions, workplace and home issues, and many other topics, as well as to links to all their past updates.

Updated Loan Forgiveness Application:  The SBA released two loan applications, one is an updated version and the other is a new “EZ” form. Withum has analyzed both in this article.  The EZ form allows borrowers to ignore FTE and headcount reduction calculations and fill out a truncated form if they meet one of three criteria. True to form, some of the criteria requires meaningful clarification, specifically the third one noted in the article. There are rumors that a number of new FAQs are coming out within the next week or so.  

With respect to the criteria below, it is unclear if the borrower needs to demonstrate an inability to operate at a point in time, or a period of time. Also the SBA calls out requirements and/or guidance  issued by three specific Federal organizations, and for the most part the restrictions on commerce have been imposed by States. Withum assumes more clarification is coming or borrowers will have to scour the websites of the three Federal organizations listed to see what restrictions or guidance have been provided.

“Borrower was unable to operate during the CP at the same level of business activity as before 2/15/20 due to compliance with requirements established or guidance issued between 3/1/20 and 12/31/20 by HHS, CDC or OSHA, relating related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.”

New Bill in Congress Relating to the PPP:  It’s a new week, so there is of course a new Bill in the works. This one is called the Prioritized Paycheck Protection Program (P4) Act. This Bill is designed to allow small companies (less than 100 employees) to obtain a second PPP loan if they exhausted their current PPP loan and have suffered a 50%+ reduction in business as a result of COVID. This Bill was just introduced and we will see if it picks up steam in the coming weeks.  

Updated Loan Forgiveness Calculation:  The rules relating to loan forgiveness have evolved over time. Withum has updated the article on the mechanics of loan forgiveness here for those who are looking for updates and examples.

Reminder Section:  (what should I be doing):

• Call your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
• Talk to your payroll company about the qualified sick/family leave legislation (FFCRA, passed prior to the CAREs Act).
• Consider speaking with your bank to discuss changes to terms of existing debt facilities. The banking system remains strong.
• If you have already applied for the PPP, start forecasting how you intend to spend the funds and how to qualify for the highest amount of forgiveness possible.

On June 17, 2020 the SBA issued not one, but two PPP Loan Forgiveness Applications and sets of instructions – the revised PPP Loan Forgiveness Application and instructions (PPP Application) and the PPP Loan Forgiveness Application Form EZ and instructions (PPP EZ Application).

The revised version of the original loan forgiveness application hews closely to the original that was released on May 15, 2020, but updates it to accommodate the changes to the PPP made in the PPP Flexibility Act.  Both applications (and the two sets of related instructions) clarify some points and, in true PPP form, raise additional questions. Let’s discuss the salient points and the changes, starting with the biggest news.

Introduction of the PPP Loan Forgiveness Application Form EZ

Who Can Use Form EZ?

• Borrowers can use the form only if they are able to check one of the following three boxes:
  • Option 1: Borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time it filed its PPP loan application and it did not include any employee salaries in the computation of its loan amount when it filed its borrower application form.
  • Option 2: Borrower meets the following two requirements:
    • Borrower did not reduce the annual salary or hourly wages of any employee by more than 25% during the covered period (“CP”) compared to the reference period (January 1, 2020 – March 31, 2020); AND
    • The borrower did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the CP. (Ignore reductions that arose from an inability to rehire individuals who were employees on February 15, 2020 if the borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020.) Also ignore reductions in an employee’s hours that the borrower offered to restore and the employee refused.
  • Option 3: Borrower meets the following two requirements:
    • Borrower did not reduce the annual salary or hourly wages of any employee by more than 25% during the CP compared to the reference period (January 1, 2020 – March 31, 2020); AND
    • Borrower was unable to operate during the CP at the same level of business activity as before February 15, 2020 due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by HHS, CDC or OSHA, relating related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.

Presentation of Form EZ

• The form involves a simplified calculation that adds the payroll and non-payroll costs paid or incurred during the CP, and then applies two limits on such amount: (i) the PPP loan amount and (ii) the 60% payroll cost requirement, e., that payroll costs must constitute at least 60% of the loan forgiveness amount.
• The form eliminates the headcount and wage reduction calculations because not having either one of them is a precondition to using the form, as noted above.
• The form includes a borrower certification regarding the lack of headcount or wage reductions.

Required Documentation

The instructions to Form EZ lay out the required documentation to be submitted with, and also maintained by, the borrower.

• The following documentation is required to be submitted to the lender:
  • Payroll –
    • Documentation verifying eligible cash compensation and non-cash benefit payments from the CP or APCP – including tax filings and/or third-party payroll service provider reports for payroll costs and payment receipts, cancelled checks and/or account statements for health insurance and retirement plan contributions
    • If a borrower selected Option 2 above, documentation supporting the average number of FTE employees on payroll on January 1, 2020 and the end of the covered period (since the certification requires that there was no reduction, we presume lenders will want to see support for the entirety of the period in between, as well, and recommend that borrowers are prepared to provide this)
  • Nonpayroll – it does not appear that there were any changes to the requested documentation from the initial loan forgiveness application
• The following documentation is required to be maintained, but is not required to be submitted. Please note that the lenders may require this information at their discretion:
  • Documentation supporting certification that annual salaries or hourly wages were not reduced by more than 25% during the CP or APCP relative to January 1, 2020 – March 31, 2020. Employees must be separately listed and it must show amounts paid to each employee during both periods.
  • Documentation regarding any employee job offers and refusals, refusals to accept restoration of reductions in hours, firings for cause, voluntary resignations, written requests by any employee for reductions in work schedule, and any inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020.
  • Documentation supporting the certification, if applicable, that the borrower did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the CP (other than any reductions that arose from an inability to rehire individuals who were employees on February 15, 2020, if the borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020). This documentation must include payroll records that separately list each employee and show the amounts paid to each employee between January 1, 2020 and the end of the CP.
  • Documentation supporting the certification, if applicable, that the borrower was unable to operate between February 15, 2020 and the end of the CP at the same level of business activity as before February 15, 2020 due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19. This documentation must include copies of the applicable requirements for each borrower location and relevant borrower financial records.

Revised PPP Loan Forgiveness Application

Calculation Form

• Allows the borrower to select its enter the CP – either 8 weeks or 24 weeks.
  • For loans received on or after June 5, 2020, the instructions make it clear that a 24-week CP is required.
  • The PPP application and instructions also retain the alternative payroll covered period (“APCP”) as an option for borrowers regardless of the time of their CP, as long as they have either bi-weekly or more frequent payroll cycles.
• The formula in the calculation remains the same form the previous application, except they modified line 10 to reflect the 60% threshold adopted in the PPP Flexibility Act.

Schedule A and FTE Reductions

• Compensation to owners (i.e., owner-employees, self-employed individuals, and general partners) – borrowers are limited on forgiveness based on their selected CP, including all cash compensation and other payroll costs (insurance premiums, retirement contributions and state and local taxes), in the following manner:
  • 24-week CP: lesser of 2.5 months’ worth of their 2019 compensation (subject to $100k cap) or $20,833
  • 8-week CP: lesser of 8/52 worth of 2019 compensation (subject to $100k cap) or $15,385 (i.e., no change from prior PPP Application)
• The PPP Application now provides three different options for borrowers to avoid having to complete the daunting FTE reduction calculation (though the instructions still require borrowers to compute and to keep the supporting schedules):
  • No reduction in employees or average paid hours: if a borrower has not reduced the number of employees or average paid hours between January 1, 2020 and the end of the CP.
  • FTE Reduction Safe Harbor 1: if a borrower was unable to operate between February 15, 2020 and the end of the CP at the same level of business activity as before February 15, 2020 due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020, by HHS, CDC, or OSHA guidelines related to the maintenance of standards for sanitation, social distancing or any other worker/customer safety requirement related to COVID-19.
    • In order to claim this safe harbor, the instructions require that borrowers maintain in its files documentation that supports this certification, including copies of the applicable requirements for each borrower location and relevant financial records.
    • Borrowers must also sign an additional certification surrounding this selection, if made.
  • FTE Reduction Safe Harbor 2: if a borrower can meet the standard of a 5-step safe harbor calculation found on the PPP Schedule A Worksheet.
    • There was one update to this calculation from the previous version – Step 4 now requires a borrower to “enter the borrower’s total FTE as of the earlier of December 31, 2020, and the date this application is submitted” – presumably, this means that a borrower claiming this safe harbor can file after the end of its CP and before December 31, 2020 if its FTE levels have been restored by the date of its application.
    • In order to claim this safe harbor, the instructions require that a borrowers maintain documentation supporting the FTE information claimed in the 5 steps.
  • Curiously, regardless of whether or not one of the safe harbor options apply, the PPP Application still requires that borrowers submit documentation showing the average weekly number of FTEs for the chosen reference period (either February 15, 2019 – June 30, 2019, January 1, 2020 – February 29, 2020 or, if seasonal, any consecutive 12-week period between May 1, 2019 and September 30, 2019).

Overall, the PPP Application and PPP EZ Application are borrower-friendly in terms of the amount of forgiveness that will be available to borrowers.  There is still uncertainty about the threshold and information required of borrowers seeking to avail themselves of the FTE safe harbor pertaining to their inability to operate at the same levels as February 15, 2020. How will lenders and borrowers ascertain the reasonableness of this certification? What ”financial information” will be required to support the claim? Can a borrower claim the safe harbor if the COVID-19 restrictions have been lifted but business operations have still not recovered to the same levels? Does this certification apply through the date of application, or does it apply through December 31, 2020? This safe harbor option offered by the updated application process is bound to be one of the most widely-discussed issues in the coming weeks.

Alston & Bird have released their June 18 COVID-19 update, including the latest news on emergency funding, administrative and regulatory actions, workplace and home issues, and many other topics, as well as to links to all their past updates.